China’s A‑share market is entering a 10‑day trading hiatus for the Spring Festival (Feb 14–23), and domestic brokerages are largely advising clients to “hold through the holiday” rather than exit to cash. The guidance reflects a familiar seasonal pattern: liquidity and trading volumes typically ebb ahead of the break and surge after it, often producing a sharp rebound in the first week of trading.
Recent market data underline that pre‑holiday caution. Margin‑finance balances across Shanghai, Shenzhen and Beijing have contracted for six straight trading days and slipped below CNY 2.7 trillion as of Feb 11, while turnover has declined to characteristically muted pre‑festival levels. Brokers point to this loss of market heat as a precautionary move by investors seeking to avoid exposure to unpredictable offshore developments over the long holiday.
Analyses by multiple houses, drawing on runs of data stretching back to 2005–2006, show consistent tendencies: volume falls beginning about eight trading days ahead of the break, a trend‑style rebound often begins roughly five trading days before the holiday and extends into the second week after markets reopen. Historically the most reliable window for sustained upward movement runs to about the sixth trading day after the holiday, when trading momentum typically peaks.
Style rotation matters. House analytics highlight a pronounced flip in leadership around the festival: large‑cap indices such as the CSI 300 have tended to outperform into the holiday, while small caps — represented by indices such as the CSI 2000 — have dominated in the week after reopening. Brokers cite data spanning 2005–2025 showing the small‑cap index registering much higher probabilities of post‑holiday gains and larger average returns than the blue‑chip benchmark.
Given these patterns, a broad swathe of brokerages recommends remaining invested, though with tactical differences. Several firms urge investors to “hold” outright, some to “hold lightly” or reduce position sizes, and others to use the interval as a selective buying window. Sector advice skews toward growth and industrial technology: domestic chips, semiconductor equipment, compute and communications infrastructure, AI applications, energy storage and wind, plus longer‑horizon themes tied to China’s 15th Five‑Year priorities such as commercial aerospace, 6G, nuclear and hydrogen.
The bullish seasonal thesis is not without caveats. Many brokers acknowledge that the historical pattern could be interrupted by macro shocks, a surprise policy pivot, or underwhelming earnings once reporting season begins. Moreover, with some policy expectations already priced in, the market’s post‑holiday outperformance will depend on fresh confirmations of corporate earnings momentum and onshore liquidity remaining accommodative. For foreign investors and index‑tracking funds, the holiday window raises event‑risk considerations and underscores the value of tactical exposure to small‑cap and high‑growth segments rather than blanket bets across the market.